Claims and compensation

Ok, so your received goods are damaged, the wrong plug is attached, or the goods are returned from your customer for not functioning or other reasons. This is a bit tricky.

I use this following tactic only when it’s absolutely the manufacturer’s fault. If I also made a mistake perhaps on the order sheet or not having stated something clearly I will go mild on him and try to settle for compensation rather than a claim.

Collect all information on returned or damaged items. Document with photos, emails, and reports from your customers.

Start by calculating your loss incurred due to broken/damaged items and incurred loss due to loss of sales. Take this desired figure and add 20%.

Why 20%? Because the supplier will probably only offer you 50% of your total claim in his first response. Hopefully you can settle on the 100% (without your fictitious 20%)

Send a combined and detailed report to the supplier and state your claim with the desired amount.

If it is a new supplier he will probably try to wriggle himself out.
But if you have actual proof there is nothing he can do – but he will try to pay as little of the claim as possible.

In many cases the supplier will offer a discount on your next order. This may be acceptable if you plan on reordering and the supplier is usually reliable with your other orders/shipments.

If you do not plan on reordering from this factory you may as well demand compensation right away. I would not go as far as to threaten the supplier, but daily calls and emails will definitely help if he is stubborn on compensation.

You may also contact me and I can help communicate with the supplier (

Eventually, you will hopefully settle for the actual desired amount.

Another option is, if you have actually done an inspection by a third party and the report of this inspection shows no problems on the production or that particular problem you can actually claim money from the third-party. But you will need substantial proof, same as with the supplier. This can be done in addition to the claim to the factory to get the maximum compensation for your occurred loss.

There are also a few legal options if you are within your rights. You might want to get in touch with an expat lawyer within China or a lawyer based in your home country.

Some suppliers have product liability insurance (, which covers the loss due to a a problem with their products.

If you are importing large quantities regularly I also recommend you look into this with your trusted insurance company. There are a few within China/Hong Kong that provide this service if you don’t find anything within your home country. For example, HSBC ,which is the largest bank within Asia that most suppliers use.


Never miss any updates. Subscribe to our newsletter now.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>